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The industry newcomer is pushing the idea of an ‘instant’ home loan approval process without the need for a mortgage broker

The Reserve Bank of Australia may not be keen to force a macroprudential toolkit on lenders – but it seems the banks are taking it on themselves to make sure they do not toe the high-risk lending line.

New research has shown banks are offering fewer home loans to buyers with deposits of less than 5%, hinting that lenders are becoming more wary of high-risk mortgages.

Financial comparison website RateCity said the share of loans in its 3000-strong product database with a maximum LVR of 95% or above has fallen from 73% in August last year to 69% yesterday.

Banks that recently cut maximum LVR ratios below 95% for certain loans included ANZ, Bankwest, Bendigo and Adelaide Bank, and HSBC.
RateCity CEO Alex Parsons said the figures suggested banks were reverting to the more cautious approach seen in the few years before 2013, when LVRs spiked.

Last month Suncorp Bank also said it had significantly cut back on writing home loans with LVRs above 95% to protect itself against ‘‘inevitable” rises in interest rates.

While APRA recently warned banks against taking on too much risk – and hinted that macroprudential tools may be needed to put brakes on the market – the RBA’s head of financial stability Dr Luci Ellis said last week there will be no caps put in place to rein in riskier lending anytime soon.

This view differs markedly from the head bank across the ditch.

The Reserve Bank of New Zealand imposed loan-to-value limits on local lenders last October, and has also not ruled out capping mortgages based on incomes.

This echoed a move being considered by its British counterpart to cool Britain's property market.

Bank of England governor Mark Carney recently suggested imposing an "affordability test" on borrowers and stopping home buyers from taking mortgages more than 4.5 times their salaries.